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To safeguard equity investors from another NSE co-location type fiasco, the security market regulator has directed the stock exchange major to review all third party agreement having a data sharing component entered by it from year 2009 onwards.

Accordingly, the NSE has been directed to take necessary legal actions against the parties with whom such agreements were signed "wherever any actions of irregularity, breach of terms and conditions and other provisions of such agreements are observed".

On April 30, the market regulator in a marathon five orders in the matter came down heavily on the NSE.

"Noticee No.1 (NSE) is further directed to submit an action taken report in this regard along with the observation of its Governing Board to SEBI, within three months from date of this order," a Sebi order in the matter of NSE-Corporate Governance.

Regulator further directed the NSE to prepare a detailed documented policy with respect to data usage and data sharing with external entities with due provisions for disclosures of conflict of interest to be made at the level of any employee of NSE.

The direction on disclosures of conflict of interest assumes significance after a massive breach of corporate governance norms was observed in the case in connection to noted public policy academician Ajay Shah for collusion to access confidential market information for business purposes.

Shah and his wife Susan Thomas are credited with co-creating the NSE Nifty50 index. He has had an illustrious stint at various high-level positions, including Ministry of Finance.

However, in what could have been a criminal conspiracy worthy of celluloid screen, Shah along with some of his immediate family members created a virtual family enterprise and used their connections with NSE officials to gain a computing contract for Liquidity Index.

But, the real intent was to use the NSE's confidential data gained from the computing contract to develop algorithmic trading software for sale in the securities market, thereby compromising the integrity of securities market.

In addition, the order read: "The (data usage and sharing) policy shall be comprehensive with proper maker and checker system with provision for a periodic review to ensure prevention of misuse of the data/information".

The misuse of the bourse's co-location facility came to light in 2015 when a whistleblower alleged collusion between a few employees of the stock exchange and brokers.

It was alleged that collusion and lax of oversight allowed a few brokers faster access to market data.A

In one of the orders the regulator directed the NSE to disgorge Rs 624.89 crore in the co-location case and also barred it from accessing the securities market directly or indirectly for a period of six months.